One word is on the lips of Wall Street CEOs as they head into a potentially rocky earnings season for the first quarter of 2016: Liquidity.
Analysts are expecting a disappointing quarter and leaders of Wall Street firms are reiterating the same key phrase as they sail into the storm. The more liquidity an investor has — that is to say, the more unspent capital they are armed with to confront unforeseen challenges arising from existing investments — the better they are expected to withstand market pressures in an economic downturn.
Some are optimistic in liquidity forecasts; others are not.
BlackRock Chairman and CEO Larry Fink thinks negative interest rates will force investors to move into less-liquid investments. Fink said in the investment manager's annual shareholder letter that investors and oil-producing nations are being squeezed for liquidity, something that might have major repercussions.
"Particularly worrying is the adoption of negative interest rates by central banks attempting to spark economic growth," Fink wrote in the letter, published Sunday. "Their actions are severely punishing the world's savers and creating incentives to reach for yield, pushing investors into less-liquid asset classes and increased levels of risk, with potentially dangerous financial and economic consequences."